Economic Buzz: US manufacturing growth slows in February as tariffs and costs weigh on demand

The US manufacturing sector continued to expand in February, although growth slowed to its weakest pace in seven months. The S&P Global US Manufacturing PMI stood at 51.6, down from 52.4 in January. While the index remained above the 50 mark, which signals growth, the overall improvement in business conditions was modest. Production and new orders both increased, but at slower rates. Companies reported that severe weather and ongoing tariffs affected demand and output. Export orders declined for the eighth straight month, with tariffs cited as a key reason, particularly for reduced trade with Canada. As a result, many firms relied more heavily on domestic customers. Higher tariffs and rising raw material costs pushed up input prices again in February. Although cost inflation remained elevated, it was lower than the peaks seen last year. Companies raised their selling prices, but competition limited how much of these higher costs could be passed on to customers. Selling price inflation eased to its lowest level in over a year. Hiring activity remained cautious, with only a slight increase in employment. Backlogs fell, suggesting some spare capacity. Despite current challenges, manufacturers were more optimistic about the year ahead, supported by plans for new products and business expansion.

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